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Is there such a thing as wrongful demotion?

Terminating an employee can be a minefield for employers to navigate. Employers must be able to back up their decision in case of a lawsuit, hire a replacement and ensure that the employee will not retaliate or badmouth the company. Not to mention, many employees who are fired are good, hardworking people, and telling someone that their job is being terminated is never easy.

In the same vein, an employer must sometimes make the difficult decision to demote an employee. Perhaps the employee was performing below par, the position is being eliminated or the employee is being disciplined for misconduct. These are all legitimate reasons for a demotion. Be careful when demoting an employee, though: There is such a thing as a wrongful demotion, and it can have serious legal ramifications.

What makes a demotion “wrongful?”

The causes behind a wrongful demotion are similar to those behind a wrongful termination. Employees have certain civil rights that are guaranteed by law. Employers must be certain that the demotion is not in violation of those rights. Examples include:

  • Discriminating against an employee based on a quality that is protected by federal law, such as race, religion, nationality, gender, age, disability or veteran status.
  • Demoting someone because he or she has recently invoked the Family and Medical Leave Act. Employees who take FMLA leave are shielded from retaliation based on the fact that they used their leave.
  • Employees who have claimed that they were being harassed and may have been demoted due to their allegations.

The consequences

The consequences of initiating a wrongful demotion can range from a lawsuit to an investigation by the Equal Opportunity Employment Commission. Even if a demotion was perfectly valid, an employee who perceives it to be wrongful may still sue. The best way to protect oneself against a disgruntled employee who has been demoted is to work with an employment attorney who can protect the company's best interests.

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